China's influence on India, its resources and markets in need of re-examination after ongoing pandemic ends

New Delhi: Over a year ago, then home secretary and current Cabinet secretary Rajiv Gauba held a closed-door discussion with senior officers from states, the security and intelligence establishment. The discussion centred on the threat perceived to be emanating from China. COVID-19 had yet to emerge on the global horizon. However, officers present at the meeting expressed concerns about the growing Chinese presence in the Indian engineering, telecom, manufacturing and education sectors.

Minutes of the meeting, reviewed by Firstpost, revealed that some officers expressed concerns about China penetrating India's market, while adopting a host of discriminatory and restrictive practices against Indian companies looking to boost exports. Gauba told the officers to closely examine the fault lines in the political, economic and social structure of China, and then strategise to exploit Chinese vulnerabilities.

The officers agreed that there was uneasiness in several countries in Asia and the West about Chinese ascendancy and that India needed to guard itself from Chinese penetration in different sectors. Then, COVID-19 struck and the Chinese regime, as well as the World Health Organisation (WHO), seemed to operate like a shadowy society to bury the pandemic. There is a sense of anger among the bureaucracy, retired diplomats and even the political leadership towards China. Some decided to call out China and the WHO's duplicity and called COVID-19 a China-made pandemic and a "Chinese virus". Others have argued that this is a racist comment.

Representational image. AFP

Meanwhile in China, two important announcements were made within 24 hours: First, the country closed its borders to foreign travellers and second, President Xi Jinping called on leaders from the G-20 nations to remove trade barriers. A day before the G-20 meeting, China's Xinhua news agency had reported that its factories were open and that production had been intensified. This would mean that after allegedly exporting COVID-19, China is ready for real business while the rest of the world is trying to survive the pandemic.

In the past decade or so, the Chinese influence in Africa and Western countries, not to mention Asian countries, has grown exponentially. Even in India, Chinese exports have grown as it becomes clear from the import licences with respect to China, provided to Indian companies between 2016 and 2019 by the Department of Commerce. India has, so far, taken a very cautious approach in dealing with China.

Gauba and the officers present in that meeting knew well that besides flooding the Indian market, the Chinese were also establishing a foothold in strategic areas of the country and making investments in certain states like the mineral-rich Chhattisgarh. But the Indian approach — made clear by the minutes of the meeting reviewed — was to examine the pros and cons of increasing engagement with China through trade, because Indian officials believed that an increased economic engagement will definitely discourage the Chinese from adopting an aggressive attitude against India.

In the present scenario where India is under a 21-day lockdown and facing economic uncertainties, this policy and guarded response to Chinese activity may be in need of a rehaul. Aside from finding a strategy to reduce the Chinese footprint in critical sectors, the officers felt that a host of discriminatory and restrictive practices against Indian companies by China must be addressed.

Among the means discussed to counter the lack of market access to Indian products in China were to prohibit Chinese companies from participating in the Indian market and to focus on reducing Indian dependency on China for Active Pharmaceutical Ingredients (API) which is currently 60 percent and electronic components which is more than 64 percent. Another key area discussed at the meeting was the emergence of Chinese companies as lowest bidders in many infrastructural projects across India in the past two years, and the need for an inquiry into such firms.

At the end of the ongoing lockdown, the Indian government would do well to re-examine its China policy and the minutes of the meeting held last year can be a good starting point.